Despite this, shares in the retail giant jumped by 17p to 227.25p, partly because its numbers were not as dreadful as many City analysts had expected. The company also said it was slashing its capital expenditure to 700m this financial year and to 400m next year.

Shares in other UK retailers also rose yesterday - buoyed by the hope that Christmas might not be quite as grim as expected - but the fact that M&S's worst figures for more than three years gave the sector a fillip illustrates just how bearish investors have been about listed high street retailers.

In food, Marks & Spencer said its like-for-like sales had deteriorated to minus 5.9 per cent over the 13 weeks to 27 September. Given that food price inflation is running at about 3 per cent, this implies M&S's underlying sales volumes fell by at least 9 per cent compared to the same quarter last year.

Despite M&S spending heavily on promotions over the quarter, the retailer continues to lose some customers to more price-conscious rivals, including discounters Aldi and Lidl, as well as Tesco, Sainsbury's, Asda and Morrisons. All of these grocery rivals have continually posted underlying sales well in excess of 3 per cent this year.

Sir Stuart Rose, the executive chairman of M&S, put a brave face on the figures and hit back at recent claims by Mark Price, the managing director of Waitrose, that it is cheaper than M&S. Mr Rose said: "We are sharper in terms of our pricing than we were. I see Mr Waitrose [Mr Price] saying every week that it is cheaper than us, but it had better go and look at its pricing, given that we are much more competitive and, particularly taking quality into account, a very strong competitor."

Asked about product availability issues at M&S's food division, Mr Rose said: "It is not major but it is an irritation sometimes."

Nick Bubb, the Pali International analyst, said: "Food is the better-performing part of the overall retail sector, but you would not want to be in the premium food area. They are doing worse than Waitrose and Sainsbury's because of the price perception."

M&S said it was expecting a reduction of about 100 basis points (bp) in its UK gross margin for the full year, of which much will come on food. Analysts at Citi estimated that its gross margin in food was down 170bp over the first half of its financial year.

In general merchandise, of which clothing accounts for the majority of sales, M&S delivered like-for-like sales down 6.4 per cent, which was ahead of analysts' expectations. Mr Rose said that its clothing ranges were better than the previous quarter. "Clothing sales have not deteriorated markedly, they have gone the other way," he said.

However, Tony Shiret, the Credit Suisse analyst, said: "M&S has not reasonably addressed the core weaknesses, such as in product positioning."

The City was also reassured that M&S has taken a sword to its capital expenditure programme, which will mean its opens less space over the next two years.

Other bright spots from the results were M&S's 34 per cent rise in online sales and a 24.2 per cent uplift in international sales, as group revenues rose by 0.4 per cent. Mr Rose, who called for a cut in interest rates to boost the flagging consumer sector, also seemed to refer to the Prime Minister's soundbite about now being "no time for a novice" when he said: "Tough times require tough actions from seasoned old chaps. I believe I am a seasoned old chap."